Summit News

Luxembourg seeks Kaupthing terms revision

LUXEMBOURG (Reuters) - Luxembourg will ask banks and a Middle Eastern investor group to review the terms of an agreement to save the Luxembourg arm of crisis-hit Icelandic bank Kaupthing after the banks rejected the plan on Monday.

Interbank creditors failed to approve a planned restructuring of the bank that needs to be cleared by April 8. That is the date on which a court would order the liquidation of Kaupthing Bank Luxembourg.

“We will ask the banks, but also the investors group to review the terms of the agreement. Maybe they can offer a little bit more that can satisfy the banks. But the Luxembourg government will not do more than it has stated so far,” Luxembourg Treasury Minister Luc Frieden told the Reuters Funds Summit.

The restructuring plan involved Kaupthing Bank Luxembourg, set to be bought by a group of Middle Eastern investors, being split into two entities.

The first, New Bank, would have carried on banking activities, retain the staff and hold at least 350 million euros ($454.7 million) in cash. The second, the Securitization Company, would have pooled private banking and corporate loans, claims related to litigation and certain receivables.

Frieden said it was premature to discuss compensation for depositors. Several thousand Belgians had savings in the bank and have provisionally been offered guarantees up to 20,000 euros per person.

“For the time being we don’t have to answer that question. For now we are looking at a solution whereby the bank survives. If the bank survives, the clients retain all their money,” Frieden said.

Half of the clients had received all of their money.

“If we would go up to 100,000 euros per person, which we have not yet decided, almost all the clients would receive their money,” Frieden continued.

(Editing by Hans Peters)

($1=.7698 Euro)

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